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Crowdfunding: Does a Successful Campaign Validate a Viable Business Opportunity?

According to folklore, Steve Jobs knew exactly what people wanted or what their needs were and with that skill, created products that consumers couldn’t resist. Legend also has it that Apple never did user research or focus groups. Well… Steve did have a good product track record, but his ideas didn’t always work and there are people who say Apple did indeed do user research and product testing in the Jobs days.

Kickstarter, Indiegogo, and the like, kind of exist as a litmus test of the Jobs’ mythology, whereby a team can quickly turn a project idea into a hit, because they are confident that there’s a waiting market.

… a product that fills a void, solves a problem, offers value for its price, has a sustainable competitive advantage, is reasonably future-proof, and is profitable, can survive the crowdfunding test.

When a project goes live on one of these sites, the crowd either validates it or not. Of course we don’t know if the dev team did user research or product testing prior to launching their campaign, but even when they do, it’s no guarantee of a runaway success in the congested, first impressions are everything, crowd marketplace.

Here’s a hypothetical: say that I come up w/a really unique pasta sauce. It has all the right elements for crowdfunding, a great background story, nice packaging design, cool video, etc. It gets funded, goes to production, deliveries go smoothly, and feedback is great. Then what? If the sauce project (experiment?) morph’s into a company, will it be viable? Will it be sustainable and have reach beyond the one-time novelty of crowdfunding? Can it compete in standard distribution models such as supermarket, specialty store, or e-commerce?

The answers to all these questions come down to this: a product that fills a void, solves a problem, offers value for its price, has a sustainable competitive advantage, is reasonably future-proof, and is profitable, can survive the crowdfunding test. If it merely capitalizes on what amounts to a special audience at a particular point in time, then no.

Most likely the majority of crowdfunded projects fail the test. That’s really not a bad thing however. Some are created just for fun, to satisfy a personal goal, or have no intent on being anything other than a one-off. Those that are hopeful entryways to new businesses get a bit of advantage over traditional start-up methods by foregoing other channels and going straight to consumer. Yet, in the end, only those that have really tapped something or have a talented team that can evolve or pivot will make it.

Sadly though, lots of projects don’t have the legs to last, even ones that pick up post crowdsourcing funding. Aside from all the obvious business considerations, it really takes the ability to serve a market for the long-haul, whether it starts with instinct, timing, or some really solid knowledge of users.

Plus, great ideas get noticed – by bigger, more resourceful competitors. Apple Watch was far from the first smart watch. Other known brands hit the marketplace faster, but the category really was started by Pebble, a very successful Kickstarter campaign ($10,266,845 pledged of $100,000 goal).

According to MIT Technology review “Ramon Llamas, IDC’s research manager for wearables and mobile phones, says that while Pebble has succeeded since it launched, increasing competition has been plaguing it for the past year and a half or so, and momentum to its latest Kickstarter campaign is slowing.”

Ultimately, the answer to these challenges is the same as with any business. It takes good business planning and a user-centered design mentality. If the product or service is practical or a throw-away, if it’s expensive or cheap, or if it’s ultra-simple or technologically advanced, user interest is the dealmaker or breaker. And user interest is predicated on the underlying foundation of user experience design; creating delight, fulfillment, and share-worthiness.

Steve Jobs image by Charis Tsevis